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Continued from page 2

The list of Bernanke errors and obtuse utterings is long, this piece hasn’t scratched the surface, but the point here is that no investor or hedge fund manager of sound mind would pay enormous sums to learn about Bernanke’s thoughts on the economy. This wouldn’t happen simply because the former Fed head has long been bereft of insight into the economy.

So what drives Bernanke’s high speaking fees? This is the chilling part, though most readers probably knew this in advance. Bernanke is very much in demand not because he’s insightful, but because the Fed is all-too powerful, and he used to be Chairman of this powerful entity. If it’s not already obvious, the source of Bernanke’s new wealth is rather troublesome simply because it’s not rooted in talent; rather it’s a function of his pull, his ability to get presumably anyone with decision-making authority at the Fed on the phone.

Bernanke is selling access to investors interested to know how the Fed will distort the normal functioning of the markets. The Fed’s actions move markets, so it’s advantageous for investors to know what’s next.

Even though private business and investors would be much better lenders of last resort for only lending to solvent banks, the Fed has for over 100 years taken on that job. Even though the price of credit is the second most important one in the world, and achieved through the infinite decisions of billions of individuals around the world each millisecond, the Fed has decided that it must set the short rate for credit as though officials at the central bank can divine what the proper price should be with skill. And while the dollar’s value is a Treasury responsibility, Fed actions can surely move the dollar, and as the greenback is the most important price in the world, Fed decisions ripple around the world and ultimately affect the price of everything.

All this is why Bernanke is paid so well. He knows things that move markets. The answer, however, isn’t to enrich someone so plainly profiting from distortions created by the central bank he used to run; rather the answer is to greatly reduce the power of the Fed. If so, his fees and invites will quickly shrink both in dollar amount, and in frequency. We’re talking about someone with a pretty impressive track record when it came to always getting the direction of the economy wrong.

Whatever we do about the Fed, the joke is ultimately on those who would pay Bernanke such high fees in the first place. As Gluskin Sheff chief economist David Rosenberg pointed out to the Times, “You can spend $250,000 for Bernanke’s time at a private dinner, or you could just sit down and read what people like Janet Yellin and Mark Carney have to say. You can actually do that for free and pretty much draw the same conclusions.”

Rosenberg’s right, but what he says is more than a bit scary. Though Bernanke has mercifully departed the Fed, central bankers in positions of power who share his views remain. Whether Bernanke profits from his ties to central banks or not, the global economy will suffer so long as the confusion that informed Ben Bernanke continues to drive Fed policy. This reminds us yet again that the only answer is to end or severely curtail the hubristic source of financial instability which is the Federal Reserve itself.